IPR Assignment

Topic:
Provision of TRIPS vis a vis
GATT and impact on Indian economy
Submitted by:
Malika Oberoi
Enrollment number:
A03104419003
 INTRODUCTION

TRIPS

The TRIPS Agreement basically covers the issues related to the protection of intellectual
property in the trade-related areas to a significant degree, and it is seen as a comprehensive new
framework prescribing standards of intellectual property protection. Further, the TRIPS
Agreement has added the significance of being the first international agreement concerning all
types of intellectual property with numerous substantive provisions.
The problems of protecting of intellectual property rights were first discussed as an international
trade issue at GATT during the Tokyo Round in 1978. At the Tokyo Round there was debate and
policy coordination regarding international rules for strengthening strategies against counterfeit
goods. There had also been debate about the international protection of intellectual property at
the World Intellectual Property Organization (WIPO), a specialized agency of the UN. However,
in the context of WIPO, a number of problems were pointed out, including: (1) Treaties are
difficult to enforce, and the WIPO General Assembly can only recommend corrective measures.
(2) Adoption of treaties is based on the principle of consensus among all Members, and whether
Member States accede to a treaty or not is left entirely up to them. In other words, in the WIPO,
if a Member State violates a treaty, prompt measures to remedy the breach are unlikely to occur.
Moreover, there were many incidents of debates on treaty formation and treaty revision
becoming deadlocked due to the conflict between the interests of developed and developing
nations. Consequently, the United States, which desired stronger international 4 protection of
intellectual property, cast the problems of developing countries’ IP protection systems and their
administration as trade problems, and in an attempt to resolve these issues, pressed to make
“trade-related aspects of intellectual property including trade in counterfeit goods” (TRIPS) an
item for negotiation at the international forum concerning trade issues, namely GATT (General
Agreement on Tariffs and Trade). Thus, at the ministerial meeting of GATT held in September
1986 in Punta del Este in Uruguay, it was decided to begin negotiations on TRIPS. The debate
began, and in January 1987, the decision was made to form negotiation plans and negotiation
groups in 15 fields. Subsequently in December 1988, an interim report was put together at the
ministerial meeting in Montreal, and in April 1989 a senior officials meeting was held. However,
the first stages of TRIPS negotiations were marked by strong differences in opinion between
developed countries, which wanted discussions focused on appropriate and effective protection
of intellectual property rights, and developing countries, which argued that GATT did not have a
mandate to conduct debate on the protection of IP rights. As a result, discussions continued with
the mandate argument set aside for the time being, but there remained intense conflict between
the opinions of developed and developing countries, and negotiations made little headway. At
first, the Uruguay Round of negotiations was supposed to conclude after 4 years at the end of
1990, but negotiations became bogged down over issues of agriculture and other items, and it
was decided in December 1990 at the ministerial meeting in Brussels to extend and continue
negotiations. In April 1991 the negotiation groups were reorganized from 15 into 7, and in
December the same year, GATT Director-General Dunkel presented a proposal for final
agreement. In November 1992, the US and Europe reached general agreement on agricultural
issues, and the debate converged, with substantive negotiations finally concluding in December
1993. In April 1994 at the ministerial meeting in Marrakesh, Morocco, agreement was reached
on all points of negotiation, and the 5 TRIPS Agreement came into force together with the WTO
Agreement in January 1995. It is thought that the reason why agreement could be reached on the
TRIPS negotiations despite the heated debate between developed and developing countries, was
that the Uruguay Round agreement was adopted in the form of a single, overall undertaking. In
other words, although the TRIPS Agreement itself, which was the outcome of the TRIPS
negotiations, was disadvantageous to developing countries, there were other areas of negotiation
such as agriculture and textiles which led to results benefiting developing countries, and
therefore agreement was achieved for the Uruguay Round negotiations as a whole.

GATT

The purpose of GATT was to eliminate harmful trade protection. That had sent global trade
down 65 percent during the great depression. GATT restored economic health to the world after
the devastation of the depression and World War II GATT grew out of the Bretton woods. The
summit at Bretton Woods also created the World Bank and the International Monetary Fund to
coordinate global growth.

The summit almost led to a third organization. It was to be the highly ambitious International
Trade Organization. The 50 countries that started negotiations wanted it to be an agency within
the United Nations that would create rules, not just on trade, but also employment, commodity
agreements, business practices, Foreign Direct Investment, and services. The ITO charter was
agreed to in March 1948, but the U.S Congress and some other countries' legislatures refused to
ratify it. In 1950, the Truman Administration declared defeat, ending the ITO.

At the same time, 15 countries focused on negotiating a simple trade agreement. They agreed on
eliminating trade restrictions affecting $10 billion of trade or a fifth of the world’s total. Under
the name GATT, 23 countries signed the deal on October 30, 1947. It was put into force on June
30,1948. GATT didn’t require the approval of Congress. It was technically just an agreement
under the provisions of U.S. Reciprocal Trade Act of 1934. It was only supposed to be temporary
until the ITO replaced it.

Throughout the years, rounds of further negotiations on GATT continued. The main goal was to
further reduce tariffs. In the mid-1960s, the Kennedy round added an Anti-Dumping Agreement.
The Tokyo round in the seventies improved other aspects of trade. The Uruguay round lasted
from 1986 to 1994 and created the World Trade Organization.
GATT lives on as the foundation of the WTO. The 1947 agreement itself is defunct. But its
provisions were incorporated into the GATT 1994 agreement. That was designed to keep the
trade agreements going while the WTO was being set up. So, the GATT 1994 is itself a
component of the WTO Agreement. The original 23 GATT members were Australia,
Belgium, Brazil, Burma, now called Myanmar, Canada, Ceylon, now Sri Lanka, Chile, China,
Cuba, Czechoslovakia, now Czech Republic and Slovakia; France; India, Lebanon, Luxembourg,
Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, now Zimbabwe, Syria, South
Africa, the United Kingdom and the United States. The membership increased to more than 100
countries by 1993.
 PROVISIONS OF TRIPS VIS A VIS GATT

TRIPS
The TRIPS Agreement is a detailed and expansive agreement consisting of 73 Articles divided
into 7 Parts. Part I consists of general provisions and basic principles. Member countries are
obliged to enact domestic legislation to give effect to the provisions of the TRIPS Agreement,
which defines “intellectual property” as “all categories of intellectual property that are the
subject of Sections 1 through 7 of Part II” of the Agreement, namely copyright and related rights,
trademarks, geographical indications, industrial designs, patents, layout-designs topographies of
integrated circuits, and protection of undisclosed information trade secrets Article 1. Further, the
TRIPS Agreement provides that Members shall comply with their obligations concerning
intellectual property rights under existing treaties Article 2. These treaties that must be complied
with are specified as the Paris Convention for the Protection of Industrial Property, the Berne
Convention for the Protection of Literary and Artistic Works, the Rome Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations Rome
Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits IPIC Treaty.
6 In previous treaties concerning intellectual property rights, since there were only provisions
establishing national treatment, problems would sometimes arise where persons from specific
countries would be awarded greater protection than the country’s own nationals. Although this
kind of occurrence was not usual, it was sometimes granted as a tradeoff in return for other items
as a result of bilateral negotiations between countries. Therefore, in the TRIPS Agreement, both
national treatment Article 3 and most-favored-nation treatment Article 4 were provided as basic
principles. Although most-favored-nation treatment was stipulated in GATT previously, this
applied only to “goods”, in other words imported and exported products, whereas in the TRIPS
Agreement it came to be applied to “persons” as the holders of intellectual property rights, that
is, both natural and legal persons. Part II of the TRIPS Agreement provides standards concerning
the availability, scope and use of intellectual property rights. The contents of the provisions will
be described in detail later, but can be summarized as follows.
Copyright and Related Rights (Section 1) Provisions are included regarding clarification of the
relation to the Berne Convention Article 9, protecting the copyright of computer programs and
compilations of data Article 10, rental rights Article 11, the term of protection Article 12, and
protection of performers, producers of phonograms sound recordings and broadcasting
organizations Article 14. Regarding the protection of computer programs and compilations of
data, there had been moves led by developed countries to improve their copyright system so as to
afford protection to these rights through copyright law, but there were no clear provisions in the
Berne Convention. The TRIPS Agreement therefore made express provision for the protection of
computer programs and databases using copyright. Further, the Berne Convention permits other
countries to provide for a limited right of reproduction, provided that such reproduction does not
conflict with a normal exploitation of the work and does not unreasonably prejudice the
legitimate 7 interests of the author Article 9(2). In fact, many countries’ copyright laws permit
the private copying of works by the user, and therefore it is not a violation of copyright to
reproduce CDs and records etc. for personal enjoyment. However, due to the existence of rental
businesses that are predicated on private copying, this leads to a decrease in CD and record sales
and copyright holders are denied their proper benefits. Therefore, countries have recognized
rental rights, which enable copyright holders to license the rental of their works and claim
remuneration for this. The TRIPS Agreement obligates Members to establish rental rights at least
regarding computer programs and films.
Trademarks (Section 2) The Paris Convention makes provision for the independence of each
country in the protection of trademarks Article 5, the protection of well-known marks Article
6(2), the protection of state emblems etc. Article 6(3), the assignment of marks Article 6(4), the
protection of marks registered in other countries Article 6(5), the protection of service marks
Article 6(6), the protection of collective marks Article 7(2), and the protection of trade names
Article 8. The TRIPS Agreement supplements these provisions with extra provisions concerning
protectable subject matter Article 15, rights conferred Article 16 and the term of protection
Article 18, etc. Further, in contrast to the Paris Convention, which only provided that service
marks must be protected, the TRIPS Agreement requires the establishment of a registration
system for service marks.
Geographical indications (Section 3) The TRIPS Agreement provides additional protection
regarding wines and spirits Article 23, offering more thorough protection.
Industrial designs (Section 4) The TRIPS Agreement contains provisions concerning the
requirements for protection Article 25 and the protection itself Article 26. Since some countries
adopt the registration approach to protection of industrial designs in the same way 8 as patents,
while other countries protect them as creative works in the same way as copyright, the TRIPS
Agreement states that Members may protect industrial designs under either system.
Patents (Section 5) The TRIPS Agreement includes many substantive provisions not covered by
the Paris Convention, including patentable subject matter Article 27 rights conferred Article 28,
conditions on patent applicants Article 29, exceptions to rights conferred Article 30, other use
without authorization of the right holder Article 31, revocation/forfeiture Article 32, term of
protection Article 33, and the burden of proof for process patents Article 34.
Layout-designs of integrated circuits (Section 6) The TRIPS Agreement establishes provisions
to supplement the IPIC Treaty related to intellectual property rights for integrated circuits
regarding the scope of the protection Article 36, acts not requiring the authorization of the right
holder Article 37, and the term of protection Article 38.
Protection of undisclosed information (Section 7) The TRIPS Agreement provides protection of
information that has been kept secret undisclosed information such as knowhow and trade
secrets, as well as information submitted to governments or governmental agencies Article 39.
Further, a characteristic of the TRIPS Agreement is that it contains provisions regarding
enforcement of intellectual property rights. Part III of the Agreement contains detailed provisions
regarding general obligations Section 1, civil and administrative procedures and remedies
Section 2, provisional measures Section 3, special requirements related to border measures
Section 4, and criminal procedures Section 5. In particular, the provisions relating to regulatory
measures at a country’s border require Members to ensure that their procedures are clear and
transparent, and Members are also obliged to recognize right holders’ rights to bring claims
regarding their trademarks and copyright. 9 Consequently, the TRIPS Agreement promoted
international harmonization of systems related to the enforcement of IP rights, and particularly
with regard to border controls, the debate begun at the Tokyo Round of negotiations was
embodied in the Agreement, guaranteeing appropriate enforcement of intellectual property
rights. The TRIPS Agreement also contains provisions regarding acquisition and maintenance of
intellectual property rights and related inter-parts procedures Part IV, dispute prevention and
settlement Part V, provisional arrangements Part VI, and institutional arrangements and final
provisions Part VII. Regarding consultation and dispute resolution concerning the TRIPS
Agreement, in principle the related provisions of GATT are uniformly applied. Further, a
Council for TRIPS was set up in the WTO to focus exclusively on problems related to IP rights,
and as well as monitoring the implementation of the TRIPS Agreement, Member countries are
given the opportunity to discuss related items. Additionally, since the TRIPS Agreement
provides for a high level of protection, developing countries and least developed countries were
granted extensions on deadlines to implement the TRIPS Agreement, but most of these periods
have now elapsed.

GATT

GATT had three main provisions. The most important requirement was that each member must
confer most favored nation status to every other member. All members must be treated equally
when it comes to tariffs. It excluded the special tariffs among members of the British
Commonwealth and customs unions. It permitted tariffs if their removal would cause serious
injury to domestic producers.

Second, GATT prohibited restriction on the number of imports and exports. The exceptions
were:

 When a government had a surplus of agricultural products.

 If a country needed to protect its balance of payments because its foreign exchange
reserves were low.
 Emerging market countries that needed to protect fledgling industries.

In addition, countries could restrict trade for reasons of national security. These
included protecting patents, copyrights, and public morals.

The third provision was added in 1965. That was because more developing countries joined
GATT, and it wished to promote them. Developed countries agreed to eliminate tariffs on
imports of developing countries to boost their economies. It was also in the stronger countries'
best interests in the long run. It would increase the number of middle-class consumers
throughout the world.

The key provisions of the General Agreement on Tariffs and Trade (GATT) accord, which was
approved by the U. S. Congress on December 1, 1994, will slash tariffs globally by roughly 40
percent, extend intellectual-property protection worldwide, and tighten rules on investment and
trade in services. It further provides, via a side agreement, to standardize many of the terms of a
U. S. patent, which, undoubtedly, will open a broader debate on patent reform. The sweeping
world-trade agreement took seven years to negotiate and, although 124 nations have signed the
GATT accord, only about 40 nations thus far have given their final approval to its terms.
Subsequent to its approval by Congress, the 47-year old GATT will be succeeded, on January 1,
1995, by the World Trade Organization (WTO), which will be charged with the supervision and
enforcement of the agreement, and will use the threat of trade sanctions as its club. What GATT
will do is provide substantially higher standards of protection, covering a full range of
intellectual property rights (IPR) related to patents, trademarks, copyrights, industrial designs,
trade secrets and geographic indications, and the rest of the world will be required to adhere to
standards similar to those the U. S. already has in place.
 IMPACT ON INDIAN ECONOMY

India is the founding member of the WTO. India was in favor of multilateral trade approach. It
enjoys MFN status and allows the same status to all other trading partners. India has joined the
WTO in order to integrate the domestic economy with the world economy. Our country had been
depending on export and import for coping with the domestic needs of technology, machinery
and consumer goods. In the absence of WTO membership, we had to negotiate separately with
each and every country and be at a disadvantageous position. Country to country negotiations
every year were not only time consuming but also there used to be arm twisting negotiations with
developed countries. Thus, India joined the WTO membership. India benefited from WTO
provisions 274 in which some areas like - firstly, by reducing tariff rates on raw materials
components and, capital goods, it was able to import more for meeting her developmental
requirements. Secondly, as India is a founder member of WTO with wide membership of the
organization, India get market access in several countries without any bilateral trade agreements.
Thirdly, advanced technology would be obtained at low cost. Fourthly, because of wide
arrangement for resolving trade disputes under WTO, India would be in a better position to get
quick redressal of the trade disputes, if any. Fifthly, the scope of creating more job would be
expanded. Sixthly, the Indian exporters have deficient market information, this can be removed
by the help of WTO and country can get wider market information, and Finally, due to
increasing competition and exposure the competitive edge and productivity of Indian industry
will improve. In order to achieve the gains from WTO the government of India has announced
the Export-Import policy 1992-1997 to liberalize trade and boost domestic manufacturing sector.
The ministry of commerce of the Government of India expects that by WTO India would benefit
by creating 10 million additional jobs annually and India's market share in world exports would
improve. A Federation of Indian Chamber of Commerce and Industry (FICCI) Task Force
reports(March 1996) on WTO, rightly observed that in changing scenario there is no alternative
to Indian industry but to gear 275 up itself to raise the efficiency and competitiveness, so that
India is able to meet the competition in both, the domestic and external markets. By, this, under
certain areas like agricultural and allied exports, textiles and trade in services India can meet not
only the challenges and will be able to exploit opportunities successfully when developed
countries will co-operate to share the fruits of growth and openness in the new world trade order.
India perceives that the trade under WTO regime would benefit it in several ways. The following
are noteworthy.
1. It is expected that India's share in the world exports improves from 0.5 per cent to 1 per cent.
The phasing out of MFA by 2005 will benefit to India as the exports of textiles and clothing will
increase. Tariff reductions and reduced non-tariff barriers shall facilitate greater access of foreign
markets.
2. Benefits from increase in the world prices of agricultural products due to reduction in
subsidies and barriers to trade are also likely to occur to India and consequently the earnings of
agricultural exports will increase. From the India's point of view the major state of Central
Government programmed for development of agriculture will be exempted from the WTO
disciplines in the agricultural agreement.
3. The WTO agreement has strengthened multilateral rules and disciplines particularly related to
anti-dumping, subsidies, countervailing measures, safeguards and disputes settlement. This will
ensure greater security and predictability of international trading system which create more
favorable environment for India in the new world economic order.
With the above favorable perceptions for its economy, India consulted itself to observe the
Union Governments relating to trade and tariffs adopted by the WTO in its various Ministerial
Conferences. The highlights of commitments made by Indian government are set out as under:

TRIPS
The ruling of the two WTO Dispute Settlement Panels following the complaints made by the
USA and the European Union that India had failed to meet the commitments under Article 70.8
and 70.9 made it obligatory for the Government of India to make appropriate amendments to the
patents Act 1970 by April 19, 1999. The patents Act 1999 was passed by the Parliament in
March 1999 to provide Exclusive Marketing Rights. In respect of plant varieties, a decision has
been taken to put in place a sui-generis system as it is perceived to be in our national interest. As
far as copyrights and related rights are concerned, the Copyright Act 1957 as amended in 1994
takes care of our interest and meets the requirements of the TRIPs Agreement except in the case
of terms of protection of performers rights. A bill to increase this term to 50 years was passed by
Parliament in December, 1999. As far as lay-out designs are concerned, a legislation giving
protection to them was introduced in the Rajya Sabha on December 20, 1999 by the Department
of Electronics. In the field of trade marks, the Trade and Merchandise Marks Act (TMMA), 1958
is in its essential features, in the accordance with international law. A bill passed in Parliament in
December, 1999 278 provides for protection to service marks. On the question of geographical
indications, there is specific law in India for this purpose. Case law, however, enables legal
action for protection of geographical indications. The Government of India decided to enact a
new law on the subject to take advantage of the provisions of the TRIPs Agreement. A bill in this
regard was passed by the Parliament in December 1999.

GATT
India has commitments in 33 activities. The choice of the activities has been guided by
considerations of national benefits.
It is observed that some important sectors of India hit by WTO agreement. The specific impact
on some sectors are discuss below: Impact of WTO on Indian Agriculture the Agreement of
Agriculture (AOA) can generally be classified into four groups viz.,
(a) Imposition of import duties,
(b) Withdrawal of Quantitative Restrictions (QRs),
(c) Economic help admissible under WTO and
(d) Export subsidies.
Imposition of Import Duties The earlier GATT had a provision of trading in agricultural produce
also, but it did no facilitated in providing free trade regime around the world. It was allowed to
levy import duties and import quotas for restricting import and export subsidies as incentives to
boost traditional exports and protect the domestic activities. Fishery, forestry, rubber, jute, sisal,
coir and abaca were not covered under the traditional agricultural exports. The provisions under
for UDCs are focused to reduce tariff commitments by an average of 24 per cent in equal steps
over 10 years (up to 2004) from 1995 and for developed countries (DCs) it is 36 per cent over
the period of 6 years (up to 2000).
The most controversial area of this agreement, from India's point of view, is the patent. The
implementation period for India begins from 1995 and ends by 2005, India must grant product
patents over pharmaceutical and agricultural chemical products. The patent terms will run from
the date of the application field to 20 years thereafter. The provision for Intellectual Property
Rights (TRIPS) is a crucial area of the Uruguay Round of Trade Negotiations. It has far reaching
implication for developing countries including India. Under the new agreement, inventor's rights
widely cover patents, trademarks, copyright, industrial design, layout of integrated circuits,
geographical indications and trade secrets. The phasing-out period is specified as 10 years for
drugs and ago-chemicals and 5 years for the rest of the products. There are opportunities, for
instance in next few years many products, like drugs, software package etc. will become very
expensive for our country. The Indian software industry will be blocked unless the government
modifies the present duty structure and encourages Indian companies to develop software
packages. However, the Indian skilled personnel in software industry expected assignment from
foreign countries by easing of restrictions on their movement in the US and other developed
countries. After TRIPs, software piracy will come down and this will be an opportunity for
Indian professionals to develop new original packages and sell them in the global markets. 301
The TRIPs will also create adverse effects on pharmaceutical industry in India, when new
discoveries would become available at very heavy cost of royalties. According to the new
agreement, when the product patents will be brought into force in the year 2005 in the
developing India, drug prices will increase. The indigenous pharmaceutical industry following
the process patent will be in an adverse position. The Union Commerce Minister Mr. Pranab
Mukherjee felt that a pragmatic drug policy by the government can help. Efforts should be made
to search the condition (reputation) in western market for generic products, whose patents have
expired. The Indian drugs also give attention in finding of new chemical molecules useful in the
treatment of tropical disease like malaria, cholera and typhoid. Indian pharmacists should also
develop Ayurvedic drugs as an alternative form of medicine. Then India can hope to increase the
exports of generic, tropic and ayurvedic drugs to many countries under WTO agreement. This
will help in rational and pragmatic drug policy by the government. Under TRIPs seed will be
patented by which the input costs of Indian farmers will increase. Thus, food grain price will go
up and Indian consumers will be adversely affected. The Council for TRIPS has held several
meetings during the years 2000-2001. India has actively participated in these meetings.
Discussions under Agreement continued during the year. These include review of section on
geographical indications, patents on life forms, violation complaints, review for implementation
of the agreement etc. India has amended its, Intellectual Property Right laws relating to
copyright, trademark, industrial designs, layout designs of integrated circuits and geographical
indications, to meet its obligations under the Agreement. Bills relating to "Amendment to the
Patent Act, 1970" and "Protection of Plant Varieties and Farmers 'Right' are before the
parliament.
What India gained from WTO may be understood from the performance of its various sectors
and failures of Indian economy under WTO regime. Indian Economy and the contribution of
both the secondary, tertiary sector to GDP rising as compared to the primary sector. The faster
global linkage of Indian economy is also witnessed in 1990s as compared to 1980s and more so
during the second half of 1990s. Structural changes has also occurred in India's trade moving
towards the increasing share of manufacturing goods during the post WTO era. The GDP growth
rate under WTO is also not disappointing. 329 From this it appears that the Indian economy has
been benefited much from WTO. The true picture may be discovered from the annual per
centage change, which shows pessimistic developments in the post 1995 scenario. The table-6.10
reveals the structure and growth of Indian economy by major sectors from 1981-82 to 1999-
2000.